Art Collection to Secure a Real Estate Development Loan

Fellow appraiser Beverly Schreiber Jacoby sent me an interesting clip from Bloomberg on a real estate venture being secured in part by artworks from former hedge fund manager Michael Steinhardt.  According the article Steinhardt has pledged 20 pieces of art, including a Picasso and a Pollock as collateral on a loan from JP Morgan and Chase Bank.

I have posted many times on art as a financial asset, and this particular article from Bloomberg certainly supports the concept.  Yesterdays post also supports art as an asset as the video from ArtTactic also supports the concept and discusses the correlation between art and finance.

Bloomberg reports

Michael Steinhardt, the former hedge-fund manager who has spent at least $200 million on fine art, is using part of the collection to secure low-cost funding for his latest real estate venture.

Steinhardt and his wife, Judy, pledged 20 paintings and drawings, including five by Pablo Picasso and one by Jackson Pollock, as collateral for a loan from JPMorgan Chase Bank NA, according to New York state records. David Steinhardt, Michael’s son, said in an interview that the loan from JPMorgan’s private bank is related to an investment in the former American Stock Exchange building, which Steinhardt bought earlier this year.

“We had the opportunity to get some very cheap borrowing,” said David, who says he goes by the official title of “helper” at his father’s firm, New York-based Steinhardt Management Co.

Steinhardt, 70, joins hedge-fund managers including Steven A. Cohen and Nelson Peltz who have been using fine art to secure loans. With top works fetching record prices at auctions and borrowing costs near all-time lows, more and more ultra rich are turning to private banks to borrow against their collections, according to Suzanne Gyorgy, director for the art advisory and finance group at Citi Private Bank, a unit of Citigroup Inc. (C)

“We have seen interest in this by banks who have never done it before,” said Howard Spiegler, the co-chairman of the art law group at New York-based Herrick, Feinstein LLP. “Otherwise they are going to lose relationships because a lot of high-net-worth individuals want this kind of loan.”

To read the complete article, click HERE.